Viking Therapeutics (VKTX) stock plummeted on Wednesday after Merck (MRK) signed a deal worth up to $2.01 billion for Hansoh Pharma’s experimental weight-loss drug, HS-10535. The licensing agreement focuses on the pill that mimics the GLP-1 receptor to improve feelings of satiety and markers of blood sugar.
Merck’s move into the obesity treatment market has raised concerns among investors, who see a potential acquirer being taken off the buying list for Viking Therapeutics. William Blair analyst Andy Hsieh noted that Merck represents one of the most likely acquirers of Viking and that the licensing agreement will not preclude Merck from expanding its presence in obesity through further external business development activities.
The weight-loss pills space is highly competitive, with big-name pharma companies spending billions to move into it. In 2023, Roche paid $2.7 billion to buy Carmot Therapeutics for its suite of experimental weight-loss drugs. AstraZeneca also gained the global rights to another weight-loss drug from Eccogene in late 2023.
However, obesity is a complex multifaceted disease, and it’s unlikely that a single preclinical asset could fully address the unmet medical need. Merck’s growing incretin franchise, which includes Januvia for type 2 diabetes, makes it well-positioned to scoop up other potential weight-loss drugs like Viking Therapeutics’ VK2735.
Viking is working on a drug called VK2735, which mimics the GLP-1 and GIPR hormones. The company’s injection could be given monthly, offering less frequent dosing compared to other weight-loss drugs. Analysts believe that Viking’s in-house amylin program holds additional potential upside for shares.
Merck’s deal with Hansoh builds on its existing incretin franchise and aims to provide additional cardiometabolic benefits beyond weight reduction. The company is confident in the potential of HS-10535, which has shown promise in improving feelings of satiety and markers of blood sugar.
Despite Merck’s growing interest in obesity treatment, analysts maintain a bullish outlook for Viking Therapeutics. The company’s stock is expected to experience significant upside due to its unique asset and growth potential.
Source: https://www.investors.com/news/technology/merck-weight-loss-drugs-hansoh-pharma-licensing-deal-glp-1